Current market environment performance of dynamic, risk-managed investment solutions.
by David Wismer
Like many others, I am always interested in what drives the equity and fixed-income markets on a daily basis.
Some days, it is a total mystery—despite the financial press and investment community offering no shortage of opinions on specific reasons.
Other times, it is crystal clear.
That was the case in early April 2025, when the administration’s announcement of broad and steep tariffs led to market declines of 10% in a few days.
But when markets started to rebound in earnest in late April, recently reaching new all-time highs, the reasons behind the strength of the rally were harder to pin down.
One prominent analyst and strategist recently told CNBC that this has been “the most hated V-shaped rally in history,” given that many hedge funds and high-net-worth investors have “missed the bulk of the rally” due to skepticism around trade policy and the related uncertainty surrounding corporate earnings.
It seems like everyone has a different take on what will drive markets over the second half of the year. On any given day, investors may see warnings of “a global economic downturn starting later this year” alongside optimistic headlines like “Can the S&P 500 hit 7,000 by year-end?”
Plenty of factors—falling under the broad and often competing categories of fundamental and technical analysis—can influence markets each day, week, month, or year. They can include macroeconomic trends, fiscal and monetary policy, corporate earnings, economic data, company news, government action, elections, geopolitical risk, seasonality, sentiment of various market participants, and a variety of technical indicators.
I think it is fair to say that so far in 2025, news-driven sentiment has fueled the frequent wild market swings, often overshadowing time-tested technical-analysis tools such as pattern and trend recognition, mean reversion, relative strength, moving-average analysis, and supply and demand indicators (such as support/resistance levels or overbought/underbought conditions).
How news affects investor behavior
While I am not an investment expert, as a communications specialist, I find the impact of “news” on investment decision-making and investor behavior to be both meaningful and complex.
We have had no shortage of important news this year, starting with the new administration’s “shock and awe” policy decisions and executive orders, the impact of DOGE actions, uncertainty around inflation and energy prices, AI’s continued growing influence, shifts in consumer and business sentiment, ongoing tariff initiatives, GDP outlooks and other economic trends, speculation around interest-rate cuts, and serious geopolitical tensions.
Bespoke Investment Group provides a useful visual review of major news headlines alongside the S&P 500’s performance. June’s recap illustrates just how much investors have had to digest in recent months.
As Investopedia explains, government news releases—and really any major news event—can move markets quickly:
“In the short term, these news releases can cause large price swings as traders and investors buy and sell in response to the information. Increased action around these announcements can create short-term trends, while longer-term trends may develop as investors fully grasp and absorb what the impact of the information means for the markets.”
Two points are worth noting here:
A behavioral finance expert and Wall Street veteran addressed many of these issues in the article “How much attention should you really pay to the news?” He noted that both market professionals and individual investors face behavioral pitfalls when interpreting headlines:
“The fact is that our brains already employ a host of shortcuts to deal with all of the information we are currently exposed to. We use availability bias to give more weight to the most recent information. We use representative bias to overweight anecdotal information. And we use herding to overweight what others are doing. All of these are ways in which the brain arbitrarily reduces the available information to something that can easily support a decision. None of these heuristics make the decision more valid or accurate. …
“It is certainly important for financial professionals—if not all investors—to stay well informed on the latest political, business, economic, and market developments. But it is equally important to recognize that short-term, news-driven investment decisions are generally not a wise course of action—especially for individual investors who may lean toward overreaction.”
Flexible Plan Investments’ approach
Flexible Plan Investments (FPI) was built around quantified, active investment management and multi-strategy diversification—with a strong focus on mitigating risk. (You can read more about FPI’s philosophy on research and strategy development here.)
FPI is deeply attuned to market-driving news and data, but, as has been pointed out in this space before, “There will always be a bullish, bearish, and neutral way to interpret the news that the financial markets are faced with every day. Which one is correct? Who can say?”
FPI may have opinions on the economy or political developments, but its investment process remains grounded in data and discipline. As Peter Mauthe, FPI’s now-retired VP of business development, once put it, “Those opinions have no bearing on how we make investment decisions. Instead, we are focused on the data, rule sets, and results that help guide us to being invested on the correct side (long, inverse, cash) of all markets. … Flexible Plan views the news of the day, week, or month objectively and agnostically. We are not concerned with ‘being right in our view.’ We are concerned with being on the right side of the trend of each of the markets (stock, bond, alternative) in which we participate.”
The bottom line?
FPI emphasizes the importance of a well-defined investment plan and long-term perspective that aligns with an investor’s personal objectives and risk tolerance. That approach helps investors stay on track through full market cycles and avoid impulsive decisions driven by short-term news.
Whether markets are highly volatile or relatively calm, FPI offers a holistic portfolio approach and risk-managed strategies designed to adapt to a wide range of market environments.